April 18, 2018 / 9:24 AM / in 9 months

Stellar gains for miners and weak sterling send FTSE 100 surging

LONDON (Reuters) - Surging mining stocks and a fall in the pound boosted Britain’s FTSE 100 on Wednesday, with metals prices climbing on supply concerns and data showing an unexpected dip in inflation.

A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008. REUTERS/Toby Melville/File Photo

The index of top UK companies .FTSE jumped up 1.3 percent to 7,317.34 points, strongly outperforming other European bourses thanks to the weaker pound and its heavy weighting in commodities stocks.

Miners were the biggest gainers, driven up by continuing aluminium price strength after U.S. sanctions on Russian producer Rusal (0486.HK) sparked concerns of a supply bottleneck in metals markets.

Nickel had its biggest one-day gain since the financial crisis, and aluminium prices hit their highest point in nearly seven years.

The biggest miners Anglo American (AAL.L), BHP Billiton BLT.L, Rio Tinto (RIO.L) and Glencore (GLEN.L) all surged by between 5.4 and 7.7 percent.

Shares in Russian gold and silver producer Polymetal (POLYP.L), which had been hit by worries over the U.S. sanctions, jumped 12 percent after the firm reported a 19 percent jump in first-quarter revenue.

Hochschild Mining (HOCM.L) rose 6.8 percent after its first-quarter production report, and Evraz (EVRE.L), Fresnillo (FRES.L) and Randgold Resources RRS.L also made gains.

Europe’s index of basic resources stocks .SXPP enjoyed its best day since November 2016, up 4.3 percent.

Strong crude prices also helped drive oil majors BP (BP.L) and Royal Dutch Shell (RDSa.L) higher, after sources said Saudi Arabia wants to see crude closer to $100 a barrel. Brent crude futures LCOc1 were up $1.54 at $73.12 by 11:14 EDT (1514 GMT)

A weaker sterling also supported the FTSE. The currency fell back after data showed British inflation cooled unexpectedly to a one-year low in March, raising doubts over whether the Bank of England would indeed raise interest rates in May.

Sterling’s surge to pre-Brexit vote levels has reduced the forex-related lift enjoyed by foreign currency-earning FTSE 100 companies after sterling’s slump in the aftermath of Britain’s June 2016 vote to leave the European Union.

M&A news and results caught investors’ attention.

Worries over the UK retail market drove shopping centre operator Hammerson (HMSO.L) to pull out of its bid to take over smaller rival Intu Properties (INTUP.L).

Hammerson shares rose 4.2 percent on the news while Intu Properties slid 4.1 percent.

“Hammerson pulling out of its £3.5 billion bid for rival Intu Properties is quite a sensible move, particularly since some bigger shareholders were expressing disquiet about the deal,” said CMC Markets analyst Michael Hewson.

He added that risks to the UK retail property sector are becoming more of a concern.

Jupiter Fund Management (JUP.L) shares fell 4.6 percent after the asset manager suffered 1.3 billion pounds ($1.86 billion) of net outflows in the first quarter.

“Jupiter now needs to regain momentum in its net flows before the market recognises any value emerging in its share price,” Jefferies analysts said in a note.

Mediclinic (MDCM.L) shares jumped 9.2 percent, among top FTSE gainers, after the international private healthcare provider said it saw strong revenue growth in its Middle East division.

In the small-cap segment, De La Rue (DLAR.L), the company that makes British passports, lost 4.4 percent after abandoning its appeal against Britain’s decision to award the contract for the new blue passports to a foreign business.

The British government confirmed, after markets closed, that it had awarded the new contract to Dutch firm Gemalto (GTO.AS).

Crematorium operator Dignity (DTY.L) jumped 11.2 percent after reporting first-quarter figures which showed more customers opted for premium funeral packages.

Reporting by Julien Ponthus and Helen Reid; Editing by Mark Heinrich

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